Are Two of St. Louis' Biggest Companies Fleecing America?

Manufactured by one St. Louis company and distributed by another, a vial of Acthar can cost more than $40,000.
Manufactured by one St. Louis company and distributed by another, a vial of Acthar can cost more than $40,000. ILLUSTRATION BY EVAN SULT

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By 2012, insurance companies were increasingly dubious about both the price of Acthar and its efficacy. Health insurer Aetna reduced reimbursements for Acthar, a spokeswoman telling Reuters at the time, "The decision was based on the lack of clinical evidence that the drug is more effective than existing steroids."

In the wake of Aetna's announcement, Questcor's stock price dropped by 40 percent.

However, good news for Questcor and their shareholders came in 2014 when St. Louis-based Mallinckrodt Pharmaceuticals paid Questcor $5.9 billion as part of a merger between the two companies. The merger raised eyebrows. At the time, Questcor was the subject of two federal whistleblower complaints, a Securities and Exchange Commission investigation related to the marketing of Acthar and an ominous 2012 New York Times article that highlighted the extreme price increase. "I have a Cadillac in my refrigerator," says one Acthar patient quoted in that article, referring to an unused 5 ml vial.

One month after the merger, Bailey, the Questcor CEO whose tenure coincided with most of Acthar's price increase, sold almost a quarter million shares of Mallinckrodt, worth nearly $19 million, according to stock market tracking tool Wallmine. Bailey also joined Mallinckrodt's board of directors.

"Most of the Questcor people who stayed when I was uncomfortable, they became very rich, ungodly amounts of money," Liebler said. "Their [stock] options were back at 40 cents, 80 cents, and they probably sold at one hundred bucks. When I write the checks for my daughter's college, I know that would have been easier financially to stay. But I did the right thing."

The controversy and litigation stemming from Acthar, its pricing and marketing have only increased since Mallinckrodt's $6 billion acquisition.

While the data supporting Acthar as an effective treatment for infantile spasms is strong, the market for IS treatments is limited given the rarity of the disease. Wheless, the pediatric neurologist, said that he also believes given Acthar's price it's only a matter of time until alternative, cheaper treatments for IS appear on the market.

Seeking to expand the market for Acthar, Questcor and Mallinckrodt have both promoted it as a treatment for conditions other than infantile spasms, and at times these promotions have drawn accusations that the drug is being promoted in ways outside its FDA approval.

Mallinckrodt, which has its headquarters in St. Louis, manufactures Acthar. - DOYLE MURPHY
DOYLE MURPHY
Mallinckrodt, which has its headquarters in St. Louis, manufactures Acthar.

In 2016, a man named Barry Franks who had worked in sales for Questcor and later Mallinckrodt filed a lawsuit against the company claiming that he was fired for not selling Acthar to doctors based on uses that were not FDA approved. Acthar is FDA approved as an additional treatment for acute flare-ups of rheumatoid arthritis, or RA, but Franks claimed salespeople were incentivized to promote the drug and encourage refills as a long-term therapy to manage RA. Express Script's own prior authorization process stated that in treating rheumatic disorders, Acthar is only approved for "short term administration for an acute episode."

Furthermore, Franks' suit claimed the salaries for Mallinckrodt's sales staff were pegged directly to their ability to push Acthar to doctors as a long-term RA treatment. In addition to base pay, salespeople took part in an "Incentive Bonus Plan" — according to Franks this was referred to within the company as the "Rheum Incentive Plan" — through which salespeople could potentially earn more than their base salary.

Meanwhile, by 2018, four years after Mallinckrodt acquired Acthar, the price of one vial reached $40,000.

In addition to what Acthar is promoted as a treatment for, there are also considerable concerns about who is doing the promotion.

Spokes-doctors

Around the same time as the 2007 Express Scripts deal, Rockford's lawsuit claims, Questcor began paying doctors to aggressively market Acthar to other doctors who were then financially compensated for prescribing Acthar to their patients. These spokespeople/experts were called Key Opinion Leaders (KOLs), and Rockford's lawsuit — as well as a suit brought by the Department of Justice — alleges that the money from Questcor motivated them to promote Acthar in ways unsubstantiated by empirical research. The Rockford lawsuit, data from a ProPublica investigation and an article published in the Journal of American Medicine all indicate that Mallinckrodt continued this practice after merging with Questcor.

One of these KOLs was Maryland neurologist Ruwani Gunawardane, who according to government data in 2013 and 2014 received almost $150,000 from Questcor. From 2015 to 2018, she received $199,000 from Mallinckrodt in honoraria and for speaking, training and education.

A 2018 lawsuit brought by the Pennsylvania-based International Union of Operating Engineers Local 542 claimed, like Rockford's suit, that their health plan paid an inflated price for Acthar. The IUOE suit also alleges that Gunawardane's promotion of the drug to other doctors relied heavily on Acthar's off-label uses.

According to the NIH, "The FDA prohibits the promotion of drugs and devices for off-label uses by companies."

"These companies, and Mallinckrodt especially, have figured out that if we get a doctor to make that pitch, they think they're not marketing in violation of the law," said Don Haviland, the attorney representing Rockford. "That's why they pay big money to these doctors to go out and hawk for them."

According to the IUOE suit, Gunawardane trained other doctors to become KOLs on Acthar, including doctors who went on to prescribe Acthar to patients whose insurance was through the labor union.

Irene Greenhouse, a neurologist practicing in a suburb north of Philadelphia, is one of the doctors who the IUOE suit alleges prescribed Acthar not on the basis of it being the best treatment, but because she received money from Mallinckrodt. The suit alleges that Greenhouse prescribed one of the IUOE's health plan members Acthar for multiple sclerosis (due to HIPAA protections the patient's name is unknown). The suit claims Greenhouse prescribed Acthar in lieu of drugs that would have been cheaper and more appropriate, especially given that the patient was trying to get pregnant. The warning on Acthar's label states, "H.P.Acthar should be used during pregnancy only if the potential benefit justifies the potential risk to the fetus."

Furthermore, Express Scripts' own prior authorization process stated, "Regarding MS, there is no evidence that Acthar impacts the ultimate outcome or natural history of the disease."

The FDA has approved Acthar for MS flare-ups, but not for management of the chronic disease.

The IUOE suit also alleges Greenhouse went so far as to submit false information about the patient's medication history, claiming that other medications the patient had not taken had failed to treat her MS. In 2016, Greenhouse received $37,000 in compensation from Mallinckrodt, according to ProPublica.

"When a doctor prescribes a medication like this, why isn't it part of their Hippocratic Oath to say, 'Oh and by the way, just so you know, this company gave me $37,000 last year'?" Haviland said.

About The Author

Ryan Krull

Ryan Krull is a staff writer for the Riverfront Times. Find him on Twitter @ryanwkrull
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